Dubai company plans virtual mobile network in Middle East

Dubai: A Dubai-based company is planning to launch a "virtual mobile network" across the Middle East in hopes of accomplishing what companies such as Virgin Mobile have done in Europe.

FRiENDi Mobile could be the region's first virtual mobile network operator (MVNO), when it launches later this year, according to CEO Mikkel Vinter.

"MVNOs typically arrive when the markets reach a certain maturity level," said Vinter, who added the company is currently working in 15 countries across the region.

The company won't disclose details of exactly when or where in the region it will launch. "For competitive reasons, we want to hold back with specific details," he said.

FRiENDi Mobile was founded in early 2006 but operated under the name of Moobility Telecom until June of last year. The company is headquartered in Dubai Internet City.

According to Asad Jamal, Chairman and CEO of ePlanet Ventures, a venture capitalist from Silicon Valley who also sits on the FRiENDi's board, the virtual operators have been very successful in US and Europe.

"In Europe for example, there is a 1 to 3 ratio of operators to MNVOs," he said, estimating that there are currently 200 MVNOs in Europe.

"In the Mena region, there isn't one MNVO, so we feel that with the liberalisation in the telecom area, the build out of the infrastructure with the wireless players now coming in to each country, the stage is now set for an MNVO to come in."

MVNOs differ from traditional telecom operators in one substantial way: they do not have their own infrastructure. Instead, virtual operators purchase time wholesale on the networks of established telecos.

The virtual operator then sells the minutes, packaged with additional services, back to the customers. The added services usually cater to small segments of the market that the major operators usually ignore.

This strategy has worked well for some companies, such as Virgin Mobile, which launched in 1999 and operate in six countries, including the US and South Africa.

It is listed in the London Stock Exchange and saw revenues in 2006 of over £560 million.

Even though the FRiENDi Mobile hasn't yet begun operations, it has drawn the attention of a number of telecommunication players.

ePlanet Ventures, a company that Jamal heads as the CEO and Chairman, was ranked as the 8th largest venture capital company in the world, according to Forbes magazine.

The company's board of directors also includes Jay Metcalfe, who was involved in the start up of Vodophone and was a founding shareholder in Celtel, a pan African operator.

Jamal said ePlanet is very selective in choosing where in places its money, selecting only between eight and 10 companies to invest in, or about one per cent of the companies they investigate for investment purposes.

"We are looking for deals which have the potential to become market leaders," Jamal said.

"What we believe in is going after disruption innovation, rather than incremental innovation. If you have bull markets, you succeed in creating a company that is invaluable, but it really it takes a structured innovation to create the future market leaders."

Disruptive innovation is technology that often forces markets to change how they handle procedures.

"It shouldn't a billion dollars to make a company successful," he said. "If the idea is powerful enough, then it should be driven by its own revenues."

ePlanet's previous successes have included Baido, the largest search engine in China, and Skype, which provides telecom services via internet.

However, whether FRiENDi will be able to launch in its home country is still a question. Vinter said the company is speaking with the Telecommunications Regulatory Authority (TRA) about whether it will be able to launch in the UAE.

TRA did not respond to Gulf News inquiries about whether MNVO will be allowed to operate in the UAE.

A du spokesperson said via email that they had not considered working with a virtual network operator, and Ali Amiri, executive vice president of carrier wholesale for etisalat, said the company would not comment on virtual network operators until the TRA has made a decision.